[UPDATED with Bond Fears:] Hours After County OK's $5.6 Billion Budget, State Says "Guaranteed" $48 Million May Not Come

UPDATE, JUNE 29, 8:03 A.M.: Following up on yesterday's warning about the havoc to services--and possibly public health and safety--that will be caused by a state budget proposal that would withhold $48 million Orange County was counting on in its balanced, just-approved, $5.6 billion fiscal year 2011-12 budget, officials are also concerned about the impact on county bond financing.

That's important because it could muck with the county's ability to issue short term debt that provides cash flow to support critical services and operations, according to a Board of Supervisors-issued statement:

Orange County is currently in the process of issuing $150 million in Tax and Revenue Anticipation Notes that allow the County to cover cash flow shortfalls. The County is also borrowing $120 million to provide funding to the County and other local governments until property tax revenues are received. In the worst case scenario, a $48 million cut in State funding would adversely affect the County's financial condition and jeopardize the County's ability to borrow these funds. If financing can be obtained, the State's action could greatly increase the interest rates the County will pay and unravel the balanced budget approved by the Board of Supervisors on June 28, 2011.

ORIGINAL POST, JUNE 28, 6:03 P.M.: This morning, the Orange County Board of Supervisors approved a balanced, $5.6 billion fiscal year 2011-12 budget that required no additional cuts or layoffs than have already been done, nor did the county have to dip into its reserve fund.

This afternoon, the county was informed it may take another $48 million hit in "guaranteed funding" from the state that "threatens the ability of the County to maintain a minimum level of service and may jeopardize public health and safety."

"The proposal before the California Legislature would cut $48 million that Orange County receives from Vehicle License Fees," warns Board of Supervisors Chairman Bill Campbell in a statement the county just blasted to the news media. "The loss of revenue would force the County to make major program cuts that would affect public safety programs in the Sheriff's Department, Probation Department and Office of the District Attorney."

Campbell continues: "At its core, this will mean the County will have to close jail beds, reduce the number of prosecutors in courtrooms and close juvenile detention facilities. It would also mean significant cuts to critical public health programs including community clinics and social services. This action threatens the viability of core safety net services at a time when people need these services most of all."

Amid the economic downturn over the past four years, the county has pink-slipped employees and made dramatic cuts to programs. During that period, 1,400 budgeted employee positions were terminated, although the county claims caseloads in many safety net service areas actually increased.

Where's that drawing board . . . and bloody ax?


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